Rate cases are often prompted by a multitude of financial, operational and regulatory compliance issues, but market fundamentals have played a significant role in three recent rate cases.
The big shift in U.S. natural gas supply to new onshore unconventional production areas and the large number of new pipelines built over the last few years have led to lower U.S. gas prices, collapsing price spreads across the country and major changes in pipeline capacity utilization on older, long-haul natural gas pipelines. Some older pipeline systems are struggling to keep pace with these market changes, and a few have proposed major rate increases and rate restructuring in an effort to stem revenue declines.
BENTEK’s Market Alert, Running on Empty, examines some of the fundamental market changes that have resulted in recent rate cases filed by Tennessee Gas and Columbia Gulf in the United States and TransCanada PipeLines in Canada. This Market Alert also expands its analysis to consider the impact on flows and basis differentials in North America.
BENTEK believes more rate case filings with the Federal Energy Regulatory Commission (FERC) in the U.S. and the National Energy Board (NEB) in Canada are likely given the expected continuation of these market trends and follows these updates in the Pipeline Market Tracker.